In response to recent U.S. tariff adjustments, Chinese e-commerce platform Temu has ceased direct shipments from China to the United States. This strategic shift aligns with the termination of the de minimis rule, which previously allowed goods valued under $800 to enter the U.S. without incurring tariffs.
Background on the De Minimis Rule
The de minimis provision permitted low-value imports to bypass customs duties, facilitating a surge in direct-to-consumer shipments from Chinese retailers like Temu and Shein. This exemption significantly contributed to the rapid growth of these platforms in the U.S. market. However, the recent policy change, effective May 2, 2025, imposes tariffs of 120% on such imports, with plans to increase this rate to 200% after June 1. These measures are part of a broader strategy to address trade imbalances and protect domestic industries.
Temu’s Strategic Response
In light of these developments, Temu has transitioned to a local fulfillment model for its U.S. operations. The company now showcases products available in U.S. warehouses, with items shipped from China marked as out of stock. A Temu spokesperson stated, Temu’s pricing for U.S. consumers remains unchanged as the platform transitions to a local fulfillment model. All sales in the U.S. are now handled by locally based sellers, with orders fulfilled from within the country.
Implications for the E-Commerce Landscape
The cessation of direct shipments from China by Temu underscores the broader impact of the revised tariff policies on international e-commerce. Competitors like Shein, which heavily rely on the de minimis exemption, are also compelled to reassess their operational strategies. Analysts suggest that Shein may face more significant challenges due to its dependence on rapid shipping and a narrower product range.
Moreover, the closure of the de minimis loophole is expected to affect U.S. consumers, particularly those from low-income and minority communities who have benefited from affordable goods offered by platforms like Temu and Shein. The overall cost to U.S. consumers is estimated to increase by $10.9 billion to $13 billion, with poorer shoppers feeling the strain more acutely.
Broader Trade Policy Context
The termination of the de minimis rule is part of a series of trade measures aimed at addressing concerns over trade imbalances and the impact of low-cost imports on domestic industries. The Biden administration has also been scrutinizing the de minimis exemption, with proposals to close the loophole to prevent foreign companies from avoiding tariffs by shipping low-value goods directly to U.S. consumers.
Conclusion
Temu’s decision to halt direct shipments from China to the U.S. reflects a strategic adaptation to the evolving trade environment. By shifting to a local fulfillment model, the company aims to maintain its competitive pricing and continue serving the U.S. market effectively. This move highlights the broader challenges and adjustments faced by international e-commerce platforms in response to changing trade policies and tariff regulations.
